Figures released by the Australian Bureau of Statistics show that residential construction became a key source of growth for most state economies.
Six out of the eight states and territories recorded a strong recovery in residential construction over the 2013/14 financial year. This recovery follows a relatively weak year in 2012/13, according to an economist for the Housing Industry Association.
“These 2013/14 results follow quite a weak year for residential construction in 2012/13, when seven of the eight states and territories recorded declining levels of activity,” HIA economist Diwa Hopkins said.
“Furthermore, where there were declines, closer inspection shows that in these instances the overall situation remains healthy. In Victoria, the decline in dwelling investment was a marginal 0.1 per cent, with activity still at a near-record level. In the ACT, the decline was a non-trivial 9.0 per cent, but this is still more than 20 per cent higher than the average level during the 2000s,” she said.
“Today’s results also show the important role that new home building and home renovating activity is starting to have for state economies.”
Low interest rates are helping drive the recovery as it helps address pent-up demand for new home building. According to HIA Economics forecasts to be released today, residential construction will experience further growth in 2014/15.
However, Hopkins says there is still some way to go if we are to make material progress in addressing entrenched housing shortages.
“The effects of excessive taxation and restricted land supply are stifling the industry’s ability to respond to increases in demand. These issues require all levels of government to take action and the coming federal reviews on taxation and the federation are the obvious starting point to make real progress,” she said.